Editor’s note: this article will introduce the development of IP adjudgement of the Beijing High People’s Court in 2007, including the cases of patent, trademark, copyright, and unfair competition. It will be published with three issues of this magazine. Here introduce the development and situation of the case of patent.

 

There are six features in IP trials in 2007 at Beijing High People’s Court: 1. a large number of IP cases, totaling 465 IP disputes filed in the year; 2. a more variety of cases, including various civil IP cases, as well as invalidation cases involving patents and trademarks; 3. more appeal cases, totaling 460 appellate cases filed in the year; 4. more invalidation cases involving patents and trademarks, totaling 117, accounting for 38.48% in the year; 5. more cases of complicated, grave or essential nature; and 6. a high rate of conclusion, totaling 455 appeals were heard, accounting for 97.85% of the total such cases filed in the court. This article intends to introduce to the IP field some new developments or dynamics in the IP trials in 2007 at Beijing High People’s Court.

I. New trends in patent cases

      (I) New trends in judicial review of administrative decisions on patent invalidation cases

1. Determination of double patenting by same applicant on same date in identical product category with multiple applications for similar subject matters

Article 9 of the China’s Patent Law provides, “where two or more applicants file applications for patent for the identical invention-creation, the patent right shall be granted to the applicant whose application was filed first.” This provision reflects the principle of first to file. Paragraph 1, Article 13 of the Rules for the Implementation of the Patent Law (Rules) further provides, “for any identical invention-creations, only one patent right shall be granted.” This rule forbids double patenting. The above rules apply when different applicants apply for the same product for two or more design patents which are similar to each other, or when the same applicant applies for a patent before and later apply for another similar patent. However, do the above rules apply where the same applicant files on the same day and for the same products for two or more design patents which are similar to each other?

In the patent invalidation cases of Falmer Investments Co., Ltd. (Falmer, a U.K. company) against Patent Reexamination Board (PRB) and Foshan Shunde Xinda Dyeing and Printing Machinery Co., Ltd. (Xinda),¹ Falmer received more than one patent which were filed on the same day for the same product. Xinda petitioned for invalidation of these patents on the grounds of the provisions above from the Patent Law and the Rules. The PRB declared the design patents invalid on grounds that the patents are similar in nature. The court of first instance affirmed this decision.

Beijing High People’s Court [on appeal] held that the Falmer patents failed to comply with the “single patent” requirement under Paragraph 2, Article 31 of the Patent Law, as they were filed on the same day and for same product, and are similar to each other. However, the Board’s declaring all five patents as invalid because of the double patenting, affirmed by the court below, under the Patent Law and Manual of Patent Examining Procedure (MPEP), would work fundamental unfairness. In reality, it often occurs that an applicant chooses to file applications, on the same day and for the same product, for two or more design patents that are similar to each other, in order to maximize the scope of protection to keep out potential infringement, to accommodate various consumer needs and to increase the competitiveness of the product, which practice is not forbidden by law, and does not encroach upon any interests, national, public or private. Such is in conformity of the legislative intent of encouraging creative endeavors and promoting innovation and progress of science and technology, as provided in the Patent Law and the Rules. The MPEP requirement that “same designs shall mean two designs which are identical or similar to each other,” it is intended mainly for the circumstance where different applicants file two or more applications on the same product, or the same applicant files two or more applications on separate occasions for the same product. Applying this requirement to a single applicant who files applications on the same day and for the same product, for two or more design patents which are similar to each other, is obviously inconsistent with the legislative intent of the Patent Law and the Rules. Under this circumstance, “same designs,” as used in the MPEP, should refer to identical designs only but not similar ones. The Board was incorrect in understanding and applying the provision of Article 13 of the Rules on the double patenting issue, when it declared the patents invalid. The court below was also erroneous to affirm the Board’s decision. Beijing High People’s Court reversed, and upheld validity of the design patents. Moreover, in foreign practice, when the same applicant files applications, on the same day and for the same product, for two or more similar design patents, such similar design patents are permissible as divisional applications.

2. Determination of patentability in light of errors under Article 2, Para. 3 of the Rules

“Design” under the Patent Law means “any new design of a product’s shape, pattern or a combination thereof, as well as the combination of the color and the shape and/or pattern of a product, which creates an aesthetic feeling and is fit for industrial application.” Here, “fit for industrial application” means that the design concerned can be applied in industry and produced in mass quantities. One of the fundamental preconditions for industrial mass production is that the design must be unique and definitive. A design patent protects a design product as shown in the drawings or photographs contained in the patent document. If the graphic representations contained in a patent document are inconsistent or contradictory with each other, such inconsistency or contradiction will lead to more than one unique design and a person skilled in the art being unable to apply the design in mass industrial production. The design patent, therefore, does not comply with Article 2, Para. 3, of the Rules for, and should be declared invalid. However, it needs to be determined on the nature and level of an error or mistake whether such error or mistake will definitely lead to a failure in industrial application. In case of a minor defect which cannot cause a person skilled in the art to develop an incorrect understanding of the design, such defect may be deemed correctible as an error resulting from the drawing process. Usually the patent would not be declared invalid on account that the design cannot be implemented due to such defect. However, if the error or mistake rises to such a level and/or the graphic representations contained in the patent document are so different from each other that the object to be protected is not a single subject matter, the design patent shall be declared invalid as it is not fit for industrial application.

In the invalidation case of Shenzhen Sun Zone Electrical Appliances Ltd. (Sun Zone) against vs. PRB and Cixi Xiongsheng Electrical Appliances Co., Ltd., ²  Sun Zone’s patent for “a warm air blower (PGK150-M)” as published contains 6 drawings, i.e., front view, rear view, left view, right view, top view and bottom view. These views are inconsistent in that (1) the top view depicts, among the multiple intersecting lines under the two knobs on the top of the blower, a highest line arching upward, but the bottom view does not contain any design corresponding with this part; (2) the bottom view shows on the lower part that the foremost part of the blower is not filled up entirely with vent holes, but the front view, the left view and the right view all show that the foremost part of the machine is filled up entirely with small vent holes; (3) the left view and the right view each show two tangent curved surfaces on the left and right sides of the lower rear part of the blower, but the rear view does not show any line on this position, i.e. no tangent curved surfaces are shown in the rear view; (4) the bottom view shows a long narrow line between the two border lines below the crossing at the left corner and no such a line at the right corner, but the left view and the right view show that the left and the right are symmetrical. The PRB determined that the shapes shown in these views are inconsistent with each other on the top part, the front vent holes, the rear lower part, and the left and right side parts of the blower., and these are not mistakes that can be “corrected through certification,” because a person skilled in the art cannot determine a sole and unique shape for the top part, the forefront part, the rear lower part, or the left or right side part of the blower. The design, therefore, is not fit for industrial application, nor compliant with Article 2, Para. 3 of the Rules. Accordingly, the Board declared the patent invalid, which was affirmed by the court below.

[On appeal] Beijing High People’s Court reiterated that the graphic representations in a design should be drawn using the national standards for technical or mechanical drawing, to correctly reflect the projecting relationship, so that the views can be consistent with each other, which is also detailed in the MPEP. However, an error or mistake can and does occur with the graphic representations, due to applicant’s oversight in the application process or other reasons. In case of a drawing mistake which constitutes a major defect with the graphic representations, leaving the graphic representations being inconsistent or contradictory with each other, the object being unable to be determined for the design patent protection and the design being impossible to be applied industrially for mass production, the design patent does not comply with Article 2, Para. 3 of the Rules and therefore should be declared invalid. However, it would not fall in the parameter of Article 2, Para. 3, if (a) it is a minor defect with a graphic representation; (b) a person skilled in the art may obviously determine it as a drawing error after checking other graphic representations, and; (c) the subject matter to be protected under the design patent can still be ascertained despite the defect. In the case at hand, the inconsistencies or contradictions in the above (1), (3) and (4) are obviously minor defects as a consequence of drawing errors. As to Point (2), the contradiction stated is an obvious drawing mistake, since a person skilled in the art cannot determine a single design for the front vent holes of the blower by using the view. This drawing mistake causes a major defect with the view, so that the subject matter for design patent protection cannot be determined as sole and the view cannot be used to manufacture a corresponding product. Therefore, the design patent does not comply with Article 2, Para. 3, and should be declared invalid.

However, there is an additional opinion which was not adopted. It says that Article 2, Para. 3 provides for the subject matter –  industrial designs – to be protected by design patent, where the practical applicability of a design means that the industrial design – the object under design patent protection – can be implemented or carried out, or can be applied in industrial mass production. A design patent offers protection as shown in the photographs or drawings in the grant publication. However, unless after a careful reading, a person skilled in the art will not find an error or mistake, if any, in the photographs or drawings in the publication. Such error or mistake may be passed unnoticed by a common consumer. Moreover, an error or mistake in the photographs or drawings in the design patent document generally will not affect adversely the practical use of the design patent. Often, a manufacturer will not use, or at least not only use the photographs or drawings in the grant publication to manufacture the product incorporating the design. It is a misunderstanding or misapplication of the legislative intention to use Article 2, Para. 3 as grounds for patent invalidation.

3. Determine the use of test data to prove an unexpected technical result

Whether an unexpected technical result is achieved is one of the other elements to be considered in determining the inventiveness of an invention. By an “unexpected technical result,” it means that an invention creation, compared with prior art, acquires “qualitative” changes and new performances in technical result, or realizes “quantitative” changes outreaching what are expected generally. Such “qualitative” or “quantitative” changes cannot be foreseen or reasoned out by a person skilled in the art. When an unexpected technical result is achieved, it indicates that the invention creation has made notable progress, and that the technical scheme is not obvious. It has prominent substantive features and is inventive. However, it should be noted that the inventiveness of a chemical or medical patent requires test data to support an unexpected technical result. If a patentee provides test data which are less sufficient or creditable in order to defend against the claims of the invalidation claimant, the patent concerned cannot be determined as inventive.

In the invalidation case of Zhang Xitian vs. PRB and Shijiazhuang Pharmaceutical Group Ouyi Pharma Co., Ltd., et al,³   Zhang Xitian was the patentee of “Enantioseparation of Amlodipine.” The PRB found that Claim 1 relates to a method of enantioseparation of amlodipine, and its only difference from the prior art lies in the chiral auxiliary. As to the technical issues to be addressed, the technical solution in the patent results in a higher optical purity and yield than the prior art. Obviously the solution that the patent provides must rely on a replacement of DMSO or any organic solvent containing DMSO as in the comparative document with DMSO-d6 or any organic solvent containing DMSO-d6. However, to reach the above technical result, DMSO-d6, whether used individually or contained in an organic solvent, must reach certain content. Claim 1 of the patent does not claim for a content for DMSO-d6 in the technical scheme, leaving the technical scheme in Claim 1 unable to solve the technical problems and not acquiring any prominent substantive feature or notable progress as relative to the prior art. Therefore, Claim 1 does not satisfy the inventiveness requirement under Article 22, Para. 3 of the Patent Law. The court of first instance affirmed the decision of the PRB.

Beijing High People’s Court [on appeal] was of the opinion that test data are required generally to prove an unexpected technical result. If a patentee cannot provide sufficiently creditable test data with regard to the argument by an invalidation claimant that the unexpected technical result is not realized, the patent may be determined as not inventive or creative. For the case at hand, the technical result is indicated primarily by optical purity and yield, between which optical purity is the essential indicator. The patent discloses 5 embodiments, while the prior art discloses 11. To compare results embodied in test data should be to compare the test data with the most identical technical features and under the closest test conditions, with reference also to the general results under different test conditions. For comparison purposes, Embodiments 1 and 4 in the patent document contain the same test conditions as, and therefore are the most comparable to, Embodiments 9 and 10 in the prior art. The optical purities are both 99% in Embodiments 9 and 10 in the comparative document, while those are 99.9% and 99.2% respectively in Embodiments 1 and 4 in the patent document. The yield for Embodiment 9 in the comparative document is 67%, while that for Embodiment 1 in the patent is 68%. On the above, the substitution of DMSO-d6 for DMSO improves distinctively neither the yield nor the optical purity, and certain embodiments in the patent document even contain an optical purity lower than those in the comparative document. Therefore, compared with the comparative document, Claim 1 of the patent does not acquire any new performance, nor constitutes a “quantitative” change. Also no evidences are produced to prove that the increment the patent realizes is out of the expectation of a person skilled in the art. Therefore, the patent fails to disclose an unexpected technical result, in comparison with the comparative document.

4. Television advertising as use in public

Loss of novelty for a design patent may be made in two ways under Article 23 of the Patent Law, which provides that a design for which patent right may be granted “must not be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in this country or abroad or has been publicly used in this country.” This clearly means that disclosure can be made by publication and by use in public, both of which are sufficient to invalidate a design patent. Whereas, loss of novelty for invention patents and utility models as provided under Article 22 may occur by prior disclosure in three ways, i.e., disclosure by publication, by use or “by other means.” Clearly, the standards for determining disclosure are not identical for the two types. Further, since the territorial differences are significant between disclosure by publication and by use in public. It therefore is important to determine as to whether television advertising is “publication” or “use in public.”

In the patent invalidation case of Hangzhou Dingjin Foodstuff Co., Ltd. (Dingjin) vs. PRB, and RiRi (Quanzhou) Beverage Co., Ltd. (RiRi) as a third party, ⁴ RiRi was the patentee of a design patent titled “Beverage Container” (Patent No. 99329504.5). Dingjin Company filed a request with the PRB to invalidate the patent, on the basis that the patent had been disclosed in the television advertisement in Taiwan, while the patentee RiRi Company in Quanzhou, Fujian Province could receive the television program from Taiwan. The court of first instance was of the opinion that the disclosure by television advertisement was one of the “other means” of disclosure (as in Article 22 of the Patent Law) to constitute “use in public.” Disclosure as such is limited by the territorial jurisdiction “in this country,” and the jurisdiction under the Patent Law shall be understood to mean that of the mainland. The advertisement televised in Taiwan, does not comply with the jurisdictional standard, and is inoperative for establishing disclosure “in this country.”

Beijing High People’s Court opined that the Patent Law provides only two ways of disclosure for design patents before the filing date, namely disclosure by publication and by use in public. The term “publication” under the Patent Law means any independently-existing disseminating medium which records design contents. Television advertisement is not publication within the meaning of the Patent Law, and to disclose design contents by television advertisement is not disclosure by publication, but by use in public. The first-instance court’s determination that television advertisement constitutes disclosure by “other means” to constitute use in public is statutorily unfounded and must be corrected. The territorial jurisdiction for “this country” as it is used in Article 23 of the Patent Law is limited to the mainland. Even if Dingjin may be able to establish disclosure through television advertising of the same or similar subject matter in Taiwan, it is still insufficient to constitute disclosure in this country within the meaning of the Patent Law, and thereby invalidate the patent under Article 23. The court upheld the decision below.

(II) New developments in the trial of patent cases

1. Determination of lack of commercial purpose of alleged infringers during the term of patent

All patents have terms, and infringing acts of unauthorized exploitation of a patent must occur within the term of the patent.

In the patent infringement case of Eli Lilly & Company (a U.S. company) vs. Gan & Lee Pharmaceutical Co., Ltd., ⁵ Eli Lilly, owns the patent for “a method of preparing a medical preparation containing insulin analogs” – a currently valid patent, and Gan & Lee filed a request with the State Food and Drug Administration for medical registration of a “double-phase recombination insulin lispro injecta” and received approval for clinical test. Although the approval for medical registration was not given yet, the company added the medicine on its website as a “new-generation insulin preparation” for promotion However, the medicine that Gan & Lee is trying to register falls within the scope of the Eli Lilly patent. Eli Lilly claimed that Gan & Lee’s acts to obtain registration and approval for clinical test, as well as the listing on its website of the medicine constituted imminent infringement and an offering for sale, and sought injunction. The trial court rejected the Eli Lilly claims, because, in its opinion, Gan & Lee did not show a direct intent to sell when producing the medicine, which does not constitute the act of practicing another’s patent for commercial purpose as required by the Patent Law.

Beijing High People’s Court found that the immediate purpose of Gan & Lee’s acts, of filing a request with the State Food and Drug Administration to register the alleged infringing medicinal product and as approved and carrying out clinical tests on the product’s safety and effectiveness, is to comply with an administrative requirement, rather than to practice the Eli Lilly patent for commercial purpose within the patent term. The Patent Law provides that the patentee of a utility model or an invention has the right to exclude others from offering for sale of a patented product, or the product of a patented method, for the purpose of early control of an infringing act, so that the patentee may stop the infringement before the infringing products penetrate. An offering for sale is premised on direct sale of a product. In the case at hand, as the medicinal registration for the alleged infringing product is not obtained yet and the evidence offered by Eli Lilly was insufficient to establish that Gan & Lee was or would produce and sell the alleged infringing product within the term of the patent; neither was the evidence of the website promotion sufficient to establish an intent on the part of Gan & Lee to sell any infringing products within the patent term. An “imminent infringement” is preconditioned on “imminence” and the status of “infringement” should be such that occur or will occur soon within the term of the Eli Lilly patent. As this probability cannot be proved by the existing evidence that Gan & Lee will produce, sell or offer to sell the alleged infringing product within the term of the patent, the argument of Eli Lilly for the imminent infringement must fail.

2. Prior art defense for making comparison

The Beijing High People’s Court Opinions on Several Issues Relating to Patent Infringement of 2001 stipulates that the prior art defense is applicable only to an allegation under doctrine of equivalents, not to an allegation under literal infringement; a defendant may not argue that the subject matter of the patent, the alleged infringing product and the references are identical; it may avail itself of the administrative procedure to invalidate the patent at the PRB. However, the High Court’s document, New Developments in IP Trials (2006) points out that the prior art defense may also be available to literal infringement. Yet, it is further provided in evaluating the defense based on prior art, it is inappropriate to compare the reference with the patent; rather, a comparison should be made between the referenced prior art and the alleged infringing product: if they are identical or similar, the defense will be sustained to overrule infringement; if they are not, a further comparison should be made of the alleged infringing product with the patent to determine whether infringement could be established.

In the patent infringement case of Li Jun vs. Beijing Jinxiang Tongchuang Auto Parts Co. (“Jinxiang”), Ltd. and Danyang No. 4 Lighting Fixture Factory (“the Danyang Factory”),⁶ Li Jun was the patentee of a utility model patent titled “roller shutter for military vehicle,” filed on February 14, 2004 and issued on December 12, 2001. Jinxiang sold products produced by the Danyan Factory, allegedly infringing upon the patent. The Danyan Factory argued that the alleged infringing products were produced based on a prior art, for which evidence was adduced for a utility model patent under No. 92230316.9 of April 14, 1993 for “a free-positioning upward-rolling window screen” along with copies of the patent specification and claims. The court at trial first found that the patent read element by element on the alleged infringing product; it then allowed the argument that all the elements were found in the prior art reference, thereby sustaining defendant’s prior art defense in overruling infringement.

Beijing High People’s Court [on appeal] explained that a prior art defense in a patent infringement case may only be properly entertained by comparing the alleged infringing products and the prior art; it is improper to compare the plaintiff’s patent with the prior art proffered by the defendant, which may result in premature judicial intervention of the administrative process under the doctrine of primary jurisdiction. The only differences between the prior art and the alleged infringing product, in this case, lie in the use of a sliding rail by the alleged infringing product in place of the guiding axle used in the prior art, such that the horizontal movement of a pulley along the guiding axle became the vertical movement of a tension-locked device along the sliding rail, both elements being well within conventional technical structures, and both being interchangeable without creative efforts. For these reasons, the Danyang Factory’s defense was sustained. Although the decision below was reached on an improper ground by allowing comparison between the prior art and the patent, its result was correct, and therefore, affirmed.

3. Determination of contributory infringement

Contributory infringement is generally alleged in infringement litigation involving invention or utility model patents, where the infringer did not practice the entire patent, but a substantial portion of it. Generally speaking, infringement may not be found absent practicing a patent in its entirety, because an invention or utility model patent is protected by the scope of the patent claims, and an element applies only when it is recorded in the claims. However, contributory infringement may be found  if certain acts are committed to practice another’s patent with intent to evade infringement liabilities, but contributory infringement is generally premised on direct infringement, absent which there wouldn’t be nothing to contribute to.

In the patent infringement case of Schneider Electronic vs. Chint Group and Beijing Huayun Chint Technical Service Operation Unit,⁷  Schneider was the patentee of an invention patent for “a combination circuit breaker integrating an auxiliary trip unit and a multi-phase breaker unit,” which covers a combination breaker with an auxiliary trip unit, where the trip unit, particularly a ground fault or parallel-connected trip device, can be kept close or linked to a multi-phase breaker unit containing multiple parallel phases. The alleged infringing product was the NB1L-40 electric product of Chint Group, which links a trip unit to a single-phase breaker and is suitable for industrial occupancies, commercial occupancies, high-rise buildings and residential houses. The trial court found that the alleged infringing product which links an auxiliary trip unit to a single-phase rather than a multi-phase breaker does not fall within the range of the patent. However, as the alleged infringing product provides ways and models for the auxiliary trip unit to link with a multi-phase breaker, together with an introduction on the models of possible multi-phase breakers and an instruction on installation and use, the court concludes that this act of Chint Group constitutes contributory infringement by inducing users of the Chint product to exploit the patent of Schneider and creating conditions for direct infringement upon such patents.

      Beijing High People’s Court opined that contributory infringement means that the act does not in and of itself constitute infringement, but it paces the way for others to infringe by deliberate inducement, enticement or aiding and abetting. Generally contributory infringement is premised on a finding of direct infringement. Contributory infringement may be found where the alleged infringing product is limited staple goods, or the essential parts that have no other use. For the case at hand, the alleged infringing product is an electric surge breaker dedicated to a special range of applications. Although the manual for the alleged infringing product contains drawings, models and introductions on how an auxiliary trip unit can be linked to a multi-phase breaker, it in and by itself is insufficient to prove that the alleged infringing product is produced specially to infringe the patent concerned, nor prove that Chint Group is intended subjectively to induce others to directly exploit the patent concerned. After purchasing the alleged infringing product and a multiple of single-phase breakers, a user cannot combine what he purchases into a product which incorporates the essential technical features of the patent concerned. Also, Schneider does not argue that the manual and drawings in the manual of Chint constitute indirect infringement. The court of second instance ruled finally to disaffirm the former judgment and dismiss the claims of Schneider.(To be continued)

Endnotes:
1. See the Administrative Decision (2006) Gao Xing Zong Zi No. 464 of the Beijing High People’s Court, and the Administrative Decision (2006) Yi Zhong Hang Chu Zi No. 509 of the Beijing First Intermediate Court.
2. See the Administrative Judgment (2007) Gao Xing Zong Zi No. 344 of the Higher People’s Court Beijing, and the Administrative Judgment (2007) Yi Zhong Hang Chu Zi No. 234 of the First Intermediate Court Beijing.
3. See the Administrative Judgment (2007) Gao Xing Zong Zi No. 70 of the Higher People’s Court Beijing, and the Administrative Judgment (2006) Yi Zhong Hang Chu Zi No. 849 of the First Intermediate Court Beijing.
4. See the Administrative Judgment (2007) Gao Xing Zong Zi No. 501 of the Higher People’s Court Beijing, and the Administrative Judgment (2007) Yi Zhong Hang Chu Zi No. 73 of the First Intermediate Court Beijing.
5. See the Civil Judgment (2007) Gao Min Zong Zi No. 1598 of the Higher People’s Court Beijing, and the Civil Judgment (2005) Er Zhong Min Chu Zi No. 6026 of the Second Intermediate Court Beijing.
6. See the Civil Judgment (2007) Gao Min Zong Zi No. 1041 of the Higher People’s Court Beijing, and the Civil Judgment (2007) Er Zhong Min Chu Zi No. 1825 of the Second Intermediate Court Beijing.
7. See the Civil Judgment (2007) Gao Min Zong Zi No. 72 of the Higher People’s Court Beijing, and the Civil Judgment (2000) Yi Zhong Min Chu Zi No. 26 of the First Intermediate Court Beijing.

Liu Xiaojun is the penner of this article. He is a judge of the IP Division of the Beijing High People’s Court.

                                                                                     (Translated by Ren Qingtao)